News Release Archive

FINANCE--HST PROCEEDING WITHOUT TAX-IN PRICING
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The HST will come into effect April 1 as planned, but without
tax-in pricing, Finance Minister Bill Gillis said today.
Events this week left Nova Scotia and the House of Commons as the
only advocates of tax-in pricing. On Monday, New Brunswick served
notice that its position had changed, and on Tuesday, the Senate
banking committee recommended an amendment removing tax-in
pricing from the HST legislation. Tax-in pricing had been
included in the bill when it left the House of Commons.
Federal Finance Minister Paul Martin said he is leaning towards
accepting the Senate amendment to ensure harmonization begins
April 1.
"It is unfortunate because consumers have said consistently they
want the tax included in the price tag. People want to know how
much an item costs before they get to the cash register. We still
support it," Dr. Gillis said.
When the HST agreement was signed last spring, the four
governments - Nova Scotia, Newfoundland, New Brunswick and Ottawa
- all agreed to tax-in pricing. In recent weeks, in the face of
an intense business lobby against tax-in pricing, New Brunswick
changed its position and the Senate amended the HST bill. In the
interest of getting on with harmonization, the federal government
has said it will pass the amended bill, effectively killing
tax-in pricing.
"Tax-in pricing was difficult but workable when three provinces
were involved. It would be impossible for Nova Scotia alone to
impose a tax-in pricing law on its retailers," Dr. Gillis said.
Nova Scotia remains committed to the HST, which will become
effective April 1, because, the minister said, tax harmonization
will bring significant benefits to Nova Scotians. Prices on the
majority of items are going down.
In terms of impact on consumers, he said, most will pay about the
same amount of sales tax after March 31 as they do now.
"Tax on some items goes up, while tax on more items goes down.
For most consumers it will balance out. But the real benefit from
harmonization is the boost it gives Nova Scotia's economy. It
will reduce business costs, and make business and industry more
competitive. That will mean growth and new jobs in the Nova
Scotia economy," Dr. Gillis said.
"I want to remind people that this is part of a total package of
tax changes which includes a drop in the provincial income tax
rate in July and two programs to help low income Nova Scotians.
Those tax cuts total more than $53 million."
The 15 per cent HST replaces the 11 per cent provincial sales tax
and the seven per cent GST, which combined (and stacked) resulted
in an effective tax rate of 18.8 per cent on many items purchased
in Nova Scotia. However, the HST is applied more broadly than the
PST, so the tax on some goods and services will increase from
seven per cent to 15 per cent.
The sales tax change amounts to a $100 million a year tax cut in
Nova Scotia. Because of that loss in revenue, the federal
government is providing Nova Scotia, and the other harmonizing
provinces, with transition funding, in Nova Scotia's case, of
about $249 million over four years.
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Contact: Steve Warburton 902-424-3522
trp Mar. 12, 1997 - 2:35 p.m.